New Delhi: Wholesale price inflation declined to a 2-year low of (-) 0.58 per cent in July, as deflation in food and fuel kept WPI in the negative zone for the second consecutive month, government data released on Thursday showed.
Experts, however, projected WPI inflation to move back into positive territory in August, as base effects fade and seasonal price increases continue.
WPI-based inflation was 2.10 per cent in July last year, and (-) 0.13 per cent in June.
“Negative rate of inflation in July 2025 is primarily due to a decrease in prices of food articles, mineral oils, crude petroleum & natural gas, manufacture of basic metals, etc,” the industry ministry said in a statement.
According to WPI data, deflation in food articles widened to 6.29 per cent in July, as against a deflation of 3.75 per cent in June, with vegetables witnessing a sharp drop.
Deflation in vegetables was 28.96 per cent in July, compared to 22.65 per cent in June.
Fuel and power saw a negative inflation or deflation of 2.43 per cent in July, as against 2.65 per cent in June.
In the case of manufactured products, inflation was higher at 2.05 per cent in July, as against 1.97 per cent in the month before.
Barclays in a research note said that July wholesale price inflation was driven by lower food and energy prices.
“The continued negative print in headline in year-on-year terms despite the month-on-month rise in wholesale prices is explained by base effects,” Barclays said.
The Reserve Bank of India (RBI), which takes into account retail inflation to decide on monetary policy, had kept benchmark policy rates unchanged at 5.5 per cent earlier this month. The retail inflation in July dropped to an 8-year low of 1.55 per cent.
ICRA Senior Economist Rahul Agrawal said the deflation in wholesale inflation was largely driven by the food segment, which witnessed a larger year-on-year contraction, led by vegetables, pulses, and eggs, meat & fish.
“Similar to the CPI, the WPI is also likely to have bottomed out in July 2025. Looking ahead, ICRA expects the headline WPI to re-enter the inflationary territory in August 2025, after a gap of two months, amid the hardening in YoY prints for food and crude oil so far, depreciation in the USD/INR pair, as well as an unfavourable base,” he said.
Besides, heavy rains could push up perishable prices sharply in the second half of August, and remain a key monitorable, Agrawal said.
Bank of Baroda Economist Sonal Badhan said going forward, as uncertainties remain regarding US sanctions on importers of Russian oil and status of a ceasefire deal between Russia and Ukraine also remains in limbo, oil prices are noting some upward pressure.
“However, renewed tariff-related tensions are set to exert downward pressure on commodity prices as global growth prospects weaken. As a result, we expect WPI to remain contained in the coming months,” Badhan said.
PHDCCI President Hemant Jain said “going forward, the moderation in prices of food articles and a favourable progress in the southwest monsoon will bolster agricultural activity boosting economic growth”.